Tuesday, December 13, 2011

Tough Luck: Heads the Developer Wins, Tails the Public Loses. . Unprincipled Upzoning for Rudin Luxury Apartments at Former St. Vincent’s Site

Below is Noticing New York's testimony furnished yesterday to the City Planning Commission in connection with Rudin Management Company's proposed special upzoning of a portion of the Greenwich Village Historic district so that the company may construct a larger luxury residential condominium tower than otherwise permitted. The testimony concerning the request that involves a history of events that very significantly includes the bankruptcy and ultimate demise of the St. Vincent's Hospital is self-explanatory.

I am writing with respect to the above referenced proposal before the Commission to allow Rudin Management Company to privately benefit by side-stepping zoning that requires a lower of residential development for its above referenced site and applying to itself instead a special upzoning intended exclusively for the development of hospital buildings because of the public purpose they serve.

This comment is being offered in the name of Noticing New York, dedicated to the insistence on good economic development policies in New York and the proposition that developing New York and appreciating New York must go hand in hand. I offer this testimony as an attorney experienced in real estate, as an urban planner and as former senior government official who worked for more than a quarter of century in the areas of public finance and development for the state’s finance authorities.

For my testimony before the commission I am restating my testimony before the September 15th Community Board 2 hearing, below.

I am also attaching and including as part of my testimony to you the article I wrote about that hearing and my testimony, together with a follow-up article I wrote concerning public hearings for big New York real estate projects:

I invite you, in order to appreciate the bigger picture, not only to read these articles but also to visit it where it is posted on the web so as to make full use of all the amplifying interior links it makes available. One thing the articles make clear is how completely and rightly opposed to the Rudin proposal the community is although it is acknowledged that there is very little likelihood that the Commission will be listening to the salient points that we or the community make. - - Nevertheless, I invite you to prove me wrong by turning down the Rudin proposal.

This testimony I am furnishing will also appear on the web with links.

I am also expanding my testimony to compare and contrast the testimony furnished in connection with this matter by the Greenwich Village Society for Historic Preservation (consistent with Noticing New York’s) and the testimony furnished by the Municipal Art Society of New York (inadequate as will be discussed). That comparison and contrast follows the restatement of Noticing New York’s Community Board hearing testimony below.

Noticing New York’s September 15th Community Board 2 Hearing Testimony

• Why do we even need to be here to consider this question?

• The Rudin/St. Vincent’s real estate deal was a very complicated shell game designed to cash in using the hospital’s 501 (c) (3) status in order to upzone (and essentially sell off) a portion of historic Greenwich Village for the benefit of a private real estate developer. That was a bad thing and you certainly wouldn’t have wanted other 501(c)(3)s to follow suit notwithstanding that there were some who favored this as a way to subsidize the hospital at the expense of the integrity of the zoning code and landmark preservation law.

• The shell game failed when St. Vincent’s failed. One lesson that can be taken away from that failure is that with all the complicated rigamarole and professional energy being put into that subterfuge the eye had been taken off the ball- - In basic terms, the hospital for whom all this bending of the rules was being done was not being properly managed.

• The moral is to stick to basics, to keep your eye on doing right what needs to be done. In this case, it’s a question of proper and consistent enforcement and administration of the zoning code. You can’t get pulled off course by shenanigans.

• If Greenwich Village needs to be upzoned then thought needs to be given to doing that in a thoughtful way throughout the community as a whole.

• You can’t hand out a special up-zoning as a consolation prize when a developer fails to pull off what was a fairly nefarious deal to begin with.

I believe that the testimony furnished by Andrew Berman as Executive Director of the Greenwich Village Society for Historic Preservation accords significantly with Noticing New York’s criticism of this proposal because it focuses on the “particularly profound” issue of principle that is proposed to be violated if this proposal is approved by your commission. And that is why it quite rightly references the unleashing of the free-for-all, Wild West, open-Pandora’s Box situation we will be in if your commission does not adhere to principle. To quote from the Berman testimony:

Our fundamental, overriding concern with the requested rezoning is that a private developer, seeking to construct luxury housing on the site, is seeking an upzoning, using the current zoning density which was allowed specifically for the construction of a hospital in 1979, as the baseline for the new allowable density. This is wrong, not just for this site, but for the city as a whole. If the increased density granted for the development of public service facilities, such as hospitals, can, in whole or in part, as proposed here, be used by private, for-profit developers in the future, we are opening a deeply troubling Pandora’s Box with profound potential consequences for the entire city. If the City Planning Commission approves such a change, it is in fact putting in place a tremendous incentive to allow greater density of development for public service facilities which can later be exploited by private developers when the facility no longer exists, is forced out, or is bought out.

That issue of principle is really the whole of it: Private developer Rudin should not have conferred upon it private benefit from the extra density which was granted to St. Vincent's in order to meet a public purpose that will now not be met and with which the Rudin development has absolutely NO connection. If there is one respect in which Noticing New York’s testimony perhaps diverges from GVSP’s testimony above it is to be absolutely clear that the bamboozling shell game that was played initially was wrong and unprincipled and would have remained so even had St. Vincent’s Hospital not gone bankrupt in the course of the confused misdirection of focus.

That issue of principle zeroed in upon by the testimony that the Greenwich Village Society for Historic Preservation provided is not only the essential whole of it, it is also the hole in the doughnut of the testimony provided by the Municipal Art Society: Somehow MAS manages to provide testimony that dances around and so doing leaves at its core a void of unaddressed principle. In so doing, it consigns itself to irrelevance by suggesting that everything now is about playing a standard developer’s game of negotiating collateral prettifications when principles are violated to seize the public realm and override basics such as zoning. By engaging in those negotiations everything becomes a matter of mere degree and all track is ultimately lost of what is fair and balanced. In retrospect when all is said and done and some ersatz “compromise” is achieved, who will remember how much MAS “won” of what it “fought” for. All that will be remembered is that MAS simply participated in trotting out a familiar list of things that politically-connected developers like to negotiate about as distracting eyewash when they ride roughshod over rules and protections: affordable housing, a little bit of park space, reduced parking.

This is not to say that the huge amount of parking Rudin is proposing to introduce into Greenwich Village via this single project isn’t ludicrous: It would certainly destroy the neighborhood to introduce it as the norm. Affordable housing and park space are also nice but they shouldn’t be introduced into conversations like this as distractions that disguise the importance of what is going on.

In its testimony MAS invokes its past: “Throughout all of our work, MAS has long history of engagement in Greenwich Village.” But without guts to take on the flouting of principle, is MAS really the same MAS it was in the past?

Here is a clue: Elsewhere in its testimony MAS mentions an earlier fight, partly won and (not acknowledged) partly lost, praising, I think inappropriately, the work of its current Chairman, architect David Childs, brought in to complete both the Time Warner Center and the Freedom Tower:

In 1987, we lead the fight to scale back a proposal for a massive tower on the site of the New York Coliseum at Columbus Circle, thus leading to the creation of one of New York’s most iconic buildings, the Time Warner Center.

The commission may conceive that pragmatism is the thing that is providing the counterweight to principle as it considers this matter. That is not the case. Pragmatism isn’t what is rearing its head here; what we are witnessing is crony capitalism.

After the 2008 financial crisis people were frequently observing that we no longer have functioning capitalism in this society and that we no longer have a level playing field. What we have now instead is crony capitalism. In this regard people noted that with the government bailout of the banks after the risks undertaken by the banks soured, what we got was a privatization of profit with a socialization of risk. The proposed Rudin plan is essentially a version of this page from the crony capitalism game book.

A Rudin masterminded shell game was being played. It was very complicated and not truly defensible. But to recap, the idea was that St. Vincent’s Hospital’s 501 (c) (3) status would be used in order to upzone (and essentially sell off) a portion of historic Greenwich Village for the benefit of a private real estate developer. As inappropriate, unprincipled and unfair as it was, everything was predicated upon a new St. Vincent’s Hospital being created and that hospital being subsidized via an infusion of some of the cash value of selling off a portion of the Greenwich Village Historic District. That plan had certain inherent risks, one of them being the risk that materialized. . . that the hospital would fail. Obviously, our argument is also that the Rudin plan may have contributed to that failure even without that being its intention.

When the risks of the Rudin plan materialized the plan should have ended. Instead, the proposal now before the commission is to rescue Rudin from the materialization of risk inherent in a plan of Rudin’s own design. The private sector will be protected and rescued by the government sector. At the same time there will be no public benefit from a hospital; there will be no government sector rescue of the public in this regard.

The only reason to protect Rudin by salvaging this deal now that the original shell game has collapsed (with no hospital being provided) is that Mr. Rudin is a member of the politically-connected 1% Club. That is the way that crony capitalism works, as will be demonstrated by the commission if it approves this proposal.

p.s. We have a protest 6:30 to 7:30 this Tuesday by Rudin Sales offices 120 West 12th Street and Christmas Eve in front of St. Vincent’s with Christmas Carols and band-aids. http://no-third-term.blogspot.com/2011/12/st-vincents-christmas-eve-protest.html?m=1

About Me

NOTICING NEW YORK & NATIONAL NOTICE are both independent entities managed by Michael D. D. White of Hop-Skip Enterprises. Michael D. D. White is an attorney, urban planner and former government public finance and development official. *** Noticing New York covers New York development and associated politics. National Notice covers national policy and economic issues *** Contact: MichaelDDWhite(at)gmail.com